For U.s., Japan, New Talks

May 25, 1994|By Merrill Goozner, Tribune Staff Writer.

TOKYO — The Clinton administration's decision Tuesday to back away from pressing Japan on trade was the first of several policy reversals expected to be made over the next few weeks in an effort to repair tattered U.S. relations with Asia.

After four days of intensive negotiations in Washington, U.S. and Japanese negotiators agreed to resume the so-called framework talks, which broke down in February. The breakthrough came after the U.S. apparently agreed to jettison demands for numerical targets for lowering Japan's trade surplus.

The Japanese side steadfastly has refused to be pinned down on specific targets if they could later be deemed missed goals that would trigger trade sanctions.

While Japan pledged to engage in talks aimed at choosing broad measures for showing that it was lowering its surpluses, at the macroeconomic level and in specific business sectors, the two sides agreed that any missed goals would result only in more talks-not reprisals. This follow-up system was essentially what Japan had suggested last February, before talks between President Clinton and then-Prime Minister Morihiro Hosokawa broke down.

The reversal on U.S.-Japan trade relations is only the first move in what appears to be a major retreat by the Clinton administration on Asia policy. The administration early next month is expected to grant China continuing most favored nation trading status, despite its continuing human-rights violations. The U.S. may slap limited sanctions on the world's most populous nation and fastest-growing economy.

Clinton came to the White House with an Asia policy based on campaign statements that stressed two sometimes contradictory ideas: that economics and trade would have a higher priority in his administration than political or national-security concerns; and that the new president would use U.S. clout to promote human rights, especially in Asia.

This seeming policy confusion reflected a tension between Clinton's experiences as an economic development-oriented governor and the strongly held beliefs of his more fervent liberal supporters. Clinton, trying to please everyone, pressed China on human rights, Japan on trade and countries as diverse as Singapore and Indonesia on their social policies, all to no avail.

Besides the resistance that came from rapidly developing countries that were no longer willing to be pushed around by the U.S., one side effect of the policies was a growing unease, bordering on anger, among diplomats, the news media and the public in this part of the world. They increasingly saw U.S. demands as moralistic posturing by a fading economic giant wracked by its own intractable social problems.

That growing reaction, felt keenly by U.S. business leaders and diplomats in the region, in recent weeks has created dissension within the administration. In an early May letter to the president, Winston Lord, secretary of state for East Asian affairs, warned of a "malaise" in U.S. policy and said the administration's attempts at pressing its varying agendas on Asian countries were producing a backlash.

"A series of American measures, threatened or employed, risk corroding our positive image in the region, giving ammunition to those charging we are an international nanny, if not bully," he wrote. "Without proper course adjustments, we could subvert our influence and our interests."

The payback from Tuesday's "course adjustment" was immediate. Japanese politicians and press commentators could barely suppress their glee after the tentative outlines of the agreement were reported in Tokyo.

Chief Cabinet Secretary Hiroshi Kumagai, previously head of the powerful Ministry of International Trade and Industry, responded, "I'll just smile," when asked by reporters whether the U.S. had reversed its position.

The accord said the two sides will engage in a new set of talks aimed at setting broad goals for lowering the overall trade imbalance, which in recent months has reached its highest levels ever. Tokyo's surplus with the United States jumped 8.9 percent in April, to $4.38 billion.

The initial set of negotiations in specific sectors will look for a set of indicators for measuring U.S. success in gaining greater access to the telecommunications, medical equipment, government procurement and insurance markets.

Despite the soaring yen, which theoretically makes the price of foreign-made goods cheaper in Japan, foreign firms have been losing ground steadily in Japan, indicated a survey released last month by the Ministry of International Trade and Industry. Foreign-owned firms now account for just 1.1 percent of all sales in Japan, down from 1.2 percent a year ago. It's the lowest level since the agency began its survey 27 years ago.

Foreign firms in the U.S. currently account for 16 percent of sales.

The two sides said they hoped to reach the four sector agreements by the next summit of leading industrialized nations, scheduled for July in Naples, Italy.